El Paso Electric (EE) is expected to grow its earnings by 23% in 2010. It isn’t very expensive with a price-to-book ratio of just 1.4.
El Paso Beat By 26% in the Second Quarter
On Aug 4, El Paso Electric, which generates and distributes electricity in the Rio Grande Valley in west Texas and southern New Mexico, reported its second quarter results which easily surprised on the Zacks Consensus Estimate.
Earnings per share were 49 cents compared with the consensus of 39 cents. It was the second time the company has surprised in the last 4 quarters.
It also easily beat the 34 cents reported in the second quarter of 2009.
The company attributed the surge in earnings to significant growth in non-fuel base retail revenues. El Paso achieved a new native system peak of 1,615 MW in July 2010.
2010 and 2011 Zacks Consensus Estimates Rise
Analysts are bullish on 2010 and 2011 given the company’s guidance of a range of $1.65 to $2.10 per share.
The 2010 Zacks Consensus is up 3 cents to $1.84 in the last 30 days. The company made just $1.50 in 2009.
Earnings growth is expected to continue in 2011 as the Zacks Consensus has risen to $1.90 from $1.86 per share.
You can see that earnings are expected to head in the right direction over the next year.
El Paso Electric Is Cheaper Than Its Peers
El Paso Electric trades with a forward P/E of 13.2 which is much cheaper than its peers at 16x. It also has a solid 1-year return on equity (ROE) of 10.1%.
Surprisingly, El Paso doesn’t pay a dividend, as many of its peers do.
El Paso Electric is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
EL PASO ELEC CO (EE): Free Stock Analysis Report
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